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New HMO rules to cost landlords an extra £79m

22nd September 2018

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Changes to mandatory Houses in Multiple Occupation (HMO) licensing coming into force in England on 1 October 2018 will collectively cost buy-to-let landlords in the region of £79m, according to new research.

The study, carried out by the Centre for Economics and Business Research (Cebr) on behalf of Currys PC World Business, has revealed that licence fees alone will hit landlords in England with an average bill of £1,027 each – £495 per property.

Under the new rules, mandatory HMO licensing is being extended to almost all HMOs that are occupied by five or more people and where there is some sharing of facilities, and that is expected to affect more than 160,000 properties, with 77,194 landlords being expected to apply for the new licence.

The licensing scheme was previously restricted to properties that were three or more storeys in height.

The move will mean councils can take further action to crack down on the small minority of landlords renting out substandard and overcrowded homes.

The Cebr estimates that local authorities stand to receive around £243,070 on average from the new license fees.

It also believes that landlords will have to spend about three hours per property applying for licences, familiarising themselves with legislation and taking time out to facilitate property inspections.

New rules will also come into force setting minimum size requirements for bedrooms in HMOs to prevent overcrowding, while landlords will also be required to adhere to council refuse schemes to reduce problems with rubbish.

The government predicts that 87,000 HMOs will be impacted by additional rules around waste disposal, which the Cebr projects will collectively cost landlords an extra £95m.